Indian Market Woes to continue- Fed rate cut a thin hope for upward trends

The market will continue to follow global cues in the coming days, but there is hope of some relief as the US Federal Reserve is widely expected to lower interest rates by 50-75 basis points on Tuesday.

"If the Fed cuts rates by 75 bps, there will certainly be a positive reaction in US market and we will follow suit. Having said that, I wouldn’t advise investors to sell nor go short, the uptrend expected would be nothing but a mere bounce-back,” said Ajay Parmar, head of research at Emkay Share & Stock Broking. IDBI Capital’s Shahina Mukadam said a 50-bps cut is more realistic given that the Fed infused $200 billion in the market last week. “If international markets don’t see much redemption, there’s no reason for our market to lose ground,” she added.

On Friday(14-3-2008) Bombay Stock Exchange's Sensex settled at 15,760.52, up 403.17 points or 2.63 per cent from the previous close. National Stock Exchange's Nifty ended 2.64 per cent or 122.8 points higher at 4,745.80. On a weekly basis, both indices lost over a per cent weighed down by losses across the globe. Add to that, India’s index of industrial production showed growth slackened disturbingly in January.

IIP rose 5.3 per cent against 7.7 per cent the previous month and capital goods, the spine of the India’s growth story, grew a mere 2.1 per cent against 16.3 per cent the previous year. “These numbers just put a niggling thought in the mind. Corporate numbers are alright. So there is no clear signal of a downtrend as yet,” Mukadam said. On a different note, the UPA-Left committee on the Indo-US nuclear deal will meet Monday to make its stand clear on the controversial deal, where the government is likely to present the draft of the India-specific Safeguards Agreement reached with International Atomic Energy Agency. The stock market will remain closed on Thursday on account of Id-E-Milad and Friday for Good Friday.

It may be noted that indian investors have already lost $500 billion in market crashes in 2008 and trend is further going to continue in 2008 since US recession is predicted to continue for full year 2008.